Morgan Stanley, a second-tier player in the mortgage-backed securities market, is beginning to make its presence felt in the collateralized mortgage obligation sector. The firm, which did not do any transactions last year according to Bloomberg, has done nearly $5 billion worth since the beginning of July. The catalyst for this shift, according to several CMO investors, has been the addition of agency CMO trader Pat Russell from Credit Suisse First Boston early last month. Indeed, a memorandum sent from Russell to the firm's account base last week thanked them for helping launch nearly $5 billion in new agency production and noted that they had traded $4.5 billion on the secondary market.
Morgan Stanley recently added Gary Mendelsohn, a whole loan structurer from Lehman Brothers. Mendelsohn will presumably be responsible for helping build a non-agency CMO effort, which has also been dormant at the firm of late. Mendelsohn's boss at Lehman, Rich McKinney, was unavailable to comment and did not respond to an e-mail.
The two deals sold by Morgan Stanley in July, FHR 2484 for $1.88 billion and FHR 2489 for $3 billion, puts it right behind CMO powerhouses UBS Warburg, Bear Stearns and Lehman Brothers, and in front of Salomon Smith Barney and CSFB.